EX.|M coation SUPPORTING U.S ;}OBS Key Messages Small businesses, suppliers, manufacturers, Chambers and the like should deliver the these messages during their Congressional meetings: 1. Ex-Im supports my job and tens of thousands of other American jobs. 2. Ex-lm helps my company succeed in a highly competitive global market. 3. We want a five-year reauthorization of Ex- ernatives to Ex-Im; ate banks cannot.E X-|M coAction SUPPORTING U.S JOBS Myth Versus Reality 12 Myths The Critics Want You To Believe About The Ex-Im Bank 1. Myth: Ex-Im is nothing more than corporate welfare, REALITY: Ex-im is a small government agency that punches above its weight. It is helping American companies compete and win in global markets, where 95% of the world population resides. It is supporting Our manufacturing base. It is supporting millions of American jobs. And it is earning a profit for the U.S Treasury that helps lower our national deficit. The Ex-Im Bank provides competitive financing for exporters of ail sizes at no expense to the taxpayer. It is available to anyone who meets the Bank's strict financing criteria and exporters who use the Bank are charged fees and interest for its services. 2. Myth: Only big companies benefit from Ex-Im. REALITY: 8,973 companies have used Ex-Im financing to facilitate export sales since 2007 — including 5,813 small businesses. There are countless more suppliers in communities across the country who are also directly impacted by the ability of exporters to compete and win overseas. 3. Myth: Ex-Im is a subsidy that benefits large corporations at the expense of U.S. taxpayers. REALITY: Anyone can access Ex-Im financing so long as they meet the Bank's strict lending criteria. The Export-Import Bank charges fees and interest to users, which in tum has generated a profit of $675 million for the U.S. Treasury.in. FY.2014.at.no.expense to taxpayers. Since 1992, the Bank has retumed approximately $7 billion to taxpayers. Be i percent of exports. Closing the Ex-im Bank would have a negligible g 4. Myth: Ex-Im financing only supports 2 impact. REALITY: cvs ant roche ajodoban fl tie no ger ora wten ne prema ene can't. Ifthe Bank did not exist, neither would the 2 percent of exports sales it finances. Last year, that 2 $27.5 bittion in goods and 164,000 jobs. in fact, the only times the U.S. has percent of exports represented 1 ; ever experienced a 2 percent drop in U.S. exports:ene.during economic recessions. i { 4- . Myth: The Export-Import Bank puts the taxpayers at risk by underwriting loans the private sector won't, and providing subsidies to big companies REALITY: Ex-im poses little risk to taxpayers. Rather, the Bank operates at a profit while covering ail of its own expenses. In over 80 years of operations its default rate has averaged less than two percent, and in recent years it has been well below one percent. In FY'14, the Bank's default rate was 12 times lower than the average commercial bank. Furthermore, the bank's reserve ratio, the amount of cash it sets aside to cover potential losses, stands at 4.5 percent. That's about three times the average for U.S. commercial banks. During the 2008 and 2009 financial crisis, the Bank was a port in the storm while many other institutions in the private sector were unable to support borrowers. 6. Myth: U.S. companies don't need Ex-lm to compete in the global market. REALITY: Our global competitors are backed by strong and generous official Export Credit Agencies (ECAs). More than 60 foreign ECAs are operating around the world, and they provide more than half a trillion dollars annually in support. If Congress allows the Ex-Im Bank to expire, U.S. exporters will have to compete for new business without this important too! to level the playing field. That means lost sales for U.S. companies and lost opportunities for U.S. workers. 7. Myth: The world should be working towards reduced export credit financing, and if we kill the Ex-im Bank, other countries will follow our lead. REALITY: Our global competitors are increasing, not decreasing, their use of official export credit to gain a leg up over U.S. companies. According to a recent analysis from the Economist Intelligence Unit, the nine largest foreign Export Credit Agencies (Brazil, Canada, China, France, Germany, Japan, Mexico, South Korea, and the United Kingdom) provided more than 18 times the level of Ex-Im Bank support in 2013. When looking at medium- and long-term loan guarantees, the United States actually ranks last among OECD and BRIC countries in ECA support when comparing support to economy size. China has indicated its own Ex-Im Bank will provide as much as $1 trillion in financing to emerging markets in Africa alone over the next decade. Ail told, the National Association of Manufacturers estimates China's export credit assistance has increased 867 percent since 2005. ere 8, Myth: The U.S. government should nét be in the business of export finance. The private sector should be filling this role. i REALITY: By law, the Ex-Im Bank is prohibited from competing with the private sector. Rather, the Bank proyides financing for exports where no private sector alternative exists. Reasons why export sales would require Ex-Im financing in the absence of ptivate sector alternatives include: + Direct competition from foreign export credit agencies; + Regulatory constraints that inhibit lending by commercial lenders; + Political and economic factors in foreign customers; and + Aprerequisite of the customer. a Taking Ex-Im out of the equation doesn't mean re-allocating capital to private banks, it means that U.S. companies simy international projects, especially when biddingjy ee 9. Myth: Ex-Im puts taxpay i Sarena! ‘Payers on the hook for subsidized loans to wealthy foreign buyers, which includes REALITY: The a Bank's low default rate — less than one fifth of one percent — is indicative of the fact that it ses minimal ri : po: imal risk to taxpayers. And for transactions that do enter default, the Bank has recovered more than it has meee ot Out over the past three years. What's more, its loan loss reserves — at more than $4 billion ailable to cover any losses the Bank could incur, 10. Myth: Ex-Im financing benefits some U.S. companies at the expense of other U.S. companies. cae Any company can apply for Ex-Im financing and, indeed, over the last 80 years companies of all ifferent size and type have used Ex-Im to secure deals abroad. And while some foreign recipients of Ex- \m loans compete in US markets against other American firms, removing Ex-Im doesn't fix this problem. Because without Ex-Im, these firms would receive similar terms from another ECA. £x-Im also conducts extensive economic impact studies on all large transactions to ensure that all deals will not harm U.S. competitors or the economy overall. If a deal would have a negative impact on a U.S. market, the Bank must scrap it. This is an obligation in Ex-Im's charter. 11. Myth: According to the Congressional Budget Office, using the Fair Value Accounting method shows that Ex-Im financing will cost taxpayers billions over the next few years. REALITY: CBO’s fair-value analysis seeks to compare Ex-Im loans and guarantees to those of private banks. If private banks generate higher returns than Ex-Im for similar loans, one can conclude that Ex-Im and taxpayers are losing out on potential profits. However, there’s a big problem with this logic — there are no comparable loans or guarantees in the private sector. CBO actually says as much in its own report. When talking about why certain estimates could be inaccurate they say: "That negative fair-value subsidy estimate could arise because ... the methods CBO used to estimate risk premiums are not precise.” Furthermore, CBO estimated economic losses, not cash losses. Even if CBO's analysis were meaningful, it only tells us how much more Ex-Im could've made by charging higher rates. If you don't believe that, go look at Treasury's 2014 receipts. You'll see Ex-Im returned $675 million last year. Full quote from CBO: “That negative fairovdlue subsidy estimate could arise because of obstacles that preyent private entities from making loans on the same terms or because CBO’s estimates understate the tru@ subsidy cost because they exclude the program's administrative costs from subsidy cash flows or because the methods CBO used to estimate risk premiums are not precise.” -"Fair-Value Estimates Of The Cost Of Selected Federal Credit Programs: For 2015 To 2024," CBO, May, 2014. a 1 fae i 12. “Myth: Killing Ex-Im will shrink the government ‘and end corporate welfare. REALITY: Given the small size of the agency and thefact that it eams a profit, killing the Bank would actually increase the deficit. A very small vocal minority Is using this debate as a fundraising tool, realizing that in Congress it's always easier to block something than it is to pass something.